Remortgaging on fixed rate?

[anna_whd]

We bought our first house just over a year ago and are on a fixed rate until next October. I know this is a very long time off but if things stay as they are, I worry about getting a new deal and our payments increasing. We have a 95% mortage and I suspect at the mo our house is worth around 5% less than we paid - so effectively we would need 100% mortgage. If we stayed with our current lender would they give us another fixed rate deal, or do you automatically go onto their variable rate? I guess if we looked at another lender they would value the house and that would not be great. How do these things work? It was a minefield getting the mortgage in the first place, had been hoping the remortgage would be somewhat easier!

[MarkSev]

Hi Anna, i think it's going to be challenging for sure, current lending market will mean it's not an ideal time to consider this situation, I would hope that later in 09 might offer a better lending position and more flexibility. However I would caution over optimism as it's unlikely that lending to the %'s that we've seen over last few years won't return - they've turned out to be too risky. My advice would be to do whatever you can to save between now and refinance in order that you are able to reduce your mortgage as I think no lender will want to refinance without a good bit of equity - don't think anything is on offer right now for sure. Although no personal experience, anecdotal evidence suggests 85% of valuation at the time (likely to be 10-20% lower than mid 2007)is possible to refinance and I'm afraid it appears I might be breaking the bad news that you'll effectively be in negative equity.....hence my recommendation to save. It's a really bad situation but one that many people will and are facing. One possible light at the end of the tunnel is that interest rates are likely to stay low and therefore SVR might actually be chaeper than your current rate. This isn't going to last forever though but at least it might buy a little more time to save and assist in refinance.